Question
Please check my work, as I was a bit unsure of it, and then help me to better understand the answers on the bottom of
Please check my work, as I was a bit unsure of it, and then help me to better understand the answers on the bottom of page.
Input Data | |
Shareholders Equity (SE) | $1,500,000 |
Net Income (NI) | $850,000 |
Stock Price (SP) | $50 |
EPS | $4 |
No. of outstanding shares | 300,000,000 |
Goodwill | $100,000 |
Intangibles | $75,000 |
Total Assets | $3,000,000 |
Net Worth Method | SE (GW+IT) $1,500,000 ($100,000 +$75,000) =$1,325,000 |
Net Income Method | NI *5 $850,000 *5 = $4,250,000 |
Price/Earnings Ratio Method | (SP/EPS)*NI ($50/4)*$850,000=$10,625,000 |
Outstanding Shares Method | #OS*SP $300,000,000 *$50 = $15,000,000,000 |
Average Method | $3,754,050,000 Av of all 4 methods |
Determine, recommend and defend the best corporate evaluation method. Identify any concerns that you have about these methods
As a future decision maker concerned about either selling or purchasing companies, explain why it is important to have a reasonable knowledge of what the firm is worth. Besides these methods, what else could a decision maker do to obtain other data points on corporate worth on assets?
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